Income Tax Addition based on a ‘Dumb Document’ as declared by CESTAT is not Sustainable: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has quashed an income tax addition made by the department depending on a document declared as a ‘dumb document’ by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

The income tax department made an addition of Rs. 1.2 crores on account of unexplained investment under the provisions of section 69B of the Act based on an excel sheet entry recovered during the search operations.

The appellant contended that the impugned addition cannot be made as the service tax addition made by the service tax department relying on the same document has been deleted by the CESTAT stating that the document relied on is a dumb document.

After considering arguments from both the sides, the Tribunal bench comprising Shri Waseem Ahmed, Accountant Member and Ms Madhumita Roy, Judicial Member observed that the CESTAT in appeal before it against demand raised under service tax held that such excel sheet as dumb document having no evidentiary value with respect to cash transactions.

“This finding of the Hon’ble CESTAT was based on facts and not on legal principle which will remain the same in any proceeding under any other Act. Therefore, once the basis of the addition has gone away, then to our considered view all other consequential proceedings will have no legs to stand,” the Tribunal said.

While concluding, the Tribunal added that “The cash entry recorded in such excel was treated by both service tax authority and authority under income tax as the unaccounted cash received by the CPIPL against booking of flats. Based on this fact, the income tax proceeding was triggered in the hands of the assessee for making unaccounted investment as such sheet contained the assessee’s name. However the Hon’ble CESTAT in appeal before it against demand raised under service tax held that such excel sheet as dumb document having no evidentiary value with respect to cash transactions. This finding of the Hon’ble CESTAT was based on facts and not on legal principle which will remain the same in any proceeding under any other Act. Therefore, once the basis of the addition has gone away, then to our considered view all other consequential proceedings will have no legs to stand.”

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